United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR RALPH WYNNE-GRIFFITHS (of Counsel) Messrs Dolmans Solicitors 17 Windsor Place Cardiff CF1 4AP
For the First Respondent For the Second Respondent	MR RICHARD BARTON (of Counsel) Messrs Anthony Jacobs & Co Solicitors 91 Albany Road Cardiff CF2 3LP IN PERSON


 


MRS JUSTICE SMITH: This is an appeal from the decision of an Industrial Tribunal Chairman sitting alone at Cardiff on 8 August 1997, whereby he determined that the Appellant was not employed by the Respondents and was therefore, not entitled to bring a claim for compensation for unfair dismissal or a redundancy payment. The decision was promulgated with Extended Reasons on 18 August 1997.

The statutory basis underlying this preliminary issue is section 94 of the Employment Rights Act 1996 which provides that "An employee has the right not to be unfairly dismissed by his employer" and section 230 (1) of the same Act, which defines an "employee" as "an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment". Section 230 (2) provides:

"(2) In this Act, 'contract of employment' means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing."

The proceedings on this preliminary issue were very short. So was the Chairman's decision and we propose to set it out in full:

"1. The applicant began to do work for the respondent on 29 March 1984 and he continued until 28 March 1997. Mr Hampson [the respondent] decided to retire and disposed of his business. The applicant was not taken on by the new owner and claims he was unfairly dismissed or alternatively made redundant. Mr Hampson denies that the applicant was ever employed by him, rather that he was an independent contractor.

2. Throughout the period that he was associated with Mr Hampson the applicant held a 714 certificate and submitted 715 receipt in return for payment. A 714 certificate is one held by a sub contractor and is issued by the Revenue. The applicant was paid on a daily basis; he was not entitled to holiday or sick pay. He was available to work for other people if he so chose; in fact we accept that he never did. He was responsible for payment of his own Income Tax and National Insurance contribution and he told me that he provided details to his Accountant of his petrol bills, car expenses, cost of overalls, tools and anything else he would need to buy in connection with his work. These amounts would then be set off against his gross earnings and he would receive tax relief. An advantage denied to employees.

3. The respondent's work in later years seemed to be solely decorating houses built by Westbury Homes. The applicant would be told where to go and what houses to paint but not how to do it. He was able to take time off as and when necessary for which he was not paid. He reaped such benefits as there were from a Tax Point of view from being self-employed.

4. Having taken into account all the evidence available I have come to the conclusion that the applicant was an independent contractor. The onus is on him to satisfy me that he was an employee and he has failed to discharge that onus."

In this appeal it is said first that the Chairman applied the wrong test to the question of whether the Appellant was an employee and in so doing has fallen into an error of law.

Second, it is submitted that if we infer that the right test was applied, the decision is perverse in that it is against the weight of the evidence. In particular, it is submitted that the Chairman has laid too much emphasis on the financial consequences of the Appellant's possession of a 714 certificate.

It is also submitted on the Appellant's behalf, that the Chairman has not considered or has given insufficient consideration to other germane factors such as

(1) the fact that the Appellant personally worked for the Respondent consistently over a period of 13 years and was never laid off;

(2) the Appellant gave notice to the Respondent before taking time off and obtained his agreement to that;

(3) that the Respondent supplied most of the tools and material which the Appellant used;

(4) that the Respondent directed the Appellant where he was to go to work and when;

(5) the Appellant worked as a team with a Mr West, who was an employee and who appears to have been treated in the same way, save for the mode of payment and

(6) the Appellant did not invest his own money in the enterprise and was working throughout for the Respondent's enterprise.

Most of these factors appear to have been covered by evidence, although only very briefly, as appears from the Notes of Evidence, which cover only one and a half A4 pages. Those notes are mainly concerned with the financial consequences of the possession of a 714 certificate.

Mr Wynne-Griffiths for the Appellant, drew our attention to documents disclosed by the Respondent, which showed that in the year 1995/96, the Respondent employed 13 decorators, described in the documents as "sub-contractors" of which 6 appear to have worked full-time. They also employed 3 decorators who were described as "employees". A similar although not identical position appertained in the following year. In other words, submitted Mr Wynne-Griffiths, about 2/3rds of the workforce were said to be sub-contractors, all on an individual basis, with their own 714 certificates. This, he submitted, was evidence before the Chairman, but no reference was made to it.

In the course of argument a number of authorities were cited to us. These included Ferguson v John Dawson & Partners (Contractors) Ltd [1976] 1 WLR 1213; Young & Woods Ltd v West [1980] IRLR 201; Lane v Shire Roofing Co (Oxford) Ltd [1995] IRLR 493; Lee Ting Sang v Chung Chi-Keung & Another [1990] ICR 409 and Clark v Oxfordshire Health Authority [1998] IRLR 125.

It appears to us, from those authorities, that the correct test which is to be applied by a Tribunal in considering the question before this Tribunal is to ask: What is the reality of the relationship between the parties? In applying that test, the Tribunal must bear in mind that the label the parties apply and the financial arrangements they make, are only factors to be considered and are not wholly determinative of the answer.

Here, it is submitted that it cannot be seen whether the Chairman has applied the right test. He has not stated what test he has applied, other than to state, properly, that the burden of proof lies upon the Applicant. We accept that he does not state what test he has applied. However, we would not consider allowing this appeal on that ground, provided that it appeared from the decision that the Chairman had applied the right test and had considered the appropriate factors. The appropriate factors and their relative importance differ to some extent from case to case. This can be seen from the authorities. Emphasis is sometimes laid upon the question who controls the workman's activities. Sometimes emphasis is placed upon the question of whether there is a continuing mutual obligation between the parties. Sometimes the question must be asked: "For whose business was the workman working, his own or the Respondents?". Here, we find it difficult, indeed impossible, to tell what factors the Chairman took into account. Certainly, he regarded the financial and tax arrangements as important. But it is impossible to tell what else he has regarded as significant. We are left with the impression that he has concentrated far too heavily on the tax position and has not given adequate consideration to other factors.

We do in any event consider that, at present, this Appellant does not know whether the Chairman has applied the right legal test and, if he has, how he has arrived at his conclusion based on that test.

We indicated to Counsel that we were minded to allow the appeal and, after hearing further argument we decided to remit this case for a rehearing of the preliminary issue before an Industrial Tribunal comprising a different Chairman and two lay members.